Hello and welcome to today’s episode, brought to you by ALPINEGATE Business Advisors, where we’ll be discussing how to set up a Limited Liability Company, or LLC, in Switzerland.
Switzerland is renowned for its stable economy, world-class infrastructure, and business-friendly tax system, making it an attractive destination for entrepreneurs worldwide. Whether you’re launching a small local business or planning something with an international scope, Switzerland provides a secure and dynamic environment for growth. At ALPINEGATE Business Advisors, we specialise in guiding businesses through every step of this process, offering personalised support and expertise. In today’s episode, we’ll explore why the LLC is such a popular choice and how you can establish one here.
What is an LLC?
An LLC, or Limited Liability Company, is a legal entity in Switzerland, meaning it has its own legal personality separate from its owners. This structure offers flexibility and protection, as the liability of the owners, or shareholders is limited to the company’s share capital. In contrast, a sole proprietorship ties the business directly to the individual owner, making them personally liable for the company’s debts. On the other hand, a Public Limited Company, or PLC, is generally used for larger businesses with higher capital requirements. The LLC sits comfortably in the middle, offering a balance of flexibility and protection, making it a popular choice for small to medium-sized businesses.
Why Choose an LLC?
There are several key reasons why entrepreneurs choose to form an LLC in Switzerland. First, the flexibility: an LLC can be started by just one person or by multiple shareholders, and it’s easy to bring in new investors later on. Next, the protection it offers: as a limited liability company, your personal assets are shielded from business liabilities, meaning your financial risk is limited to the capital invested in the company. Speaking of capital, you can start an LLC with as little as 20,000 CHF, which makes it more accessible than other legal structures. Another benefit is the ability to attract investors over time. If your business grows, converting your LLC into a Public Limited Company, or PLC, is a straightforward process, allowing for even greater expansion and more shareholders.
Key Benefits of an LLC
One of the biggest benefits of an LLC in Switzerland is limited liability. This means your personal assets, like your home or savings, are protected from business debts or legal claims against the company. Another advantage is flexibility in management. You can start an LLC on your own and, as your business grows, easily bring in additional shareholders or investors without complicated legal processes. Finally, there are significant tax benefits. Switzerland does not impose capital gains tax on the sale of LLC shares, which is a major advantage if you plan to sell or transfer ownership in the future. These features make the LLC a great choice for entrepreneurs seeking security and growth potential.
Challenges of Starting an LLC
While there are many benefits to starting an LLC, it’s important to consider the challenges as well. First, the initial setup costs are higher compared to a sole proprietorship. You’ll need to budget for notary and administrative fees, which can reach up to 3,000 CHF. Another challenge is the lack of anonymity. Shareholders of an LLC are listed publicly in the Commercial Registry, so there’s no privacy in terms of ownership. Additionally, LLCs are subject to double taxation—both the company’s profits and the income shareholders receive, such as salaries or dividends, are taxed. Finally, if your LLC grows to have more than 10 full-time employees, a mandatory audit is required, which can add to the management costs. These factors are worth considering as you plan your business structure.
Steps to Set Up an LLC
Setting up an LLC in Switzerland is a fairly straightforward process, but it does require careful preparation. First, you’ll need to gather several key documents. This includes a confirmation of your capital deposit in an escrow account—this is where you’ll place the minimum starting capital of 20,000 CHF. You’ll also need to prepare the statutes of your company, which outline the rules and structure of your LLC. Additionally, if you’re opting out of a limited audit, you’ll need a renunciation of the audit document, along with other papers like the deed of incorporation.
If you’re a foreign entrepreneur and don’t live in Switzerland, it’s mandatory to have at least one Swiss resident to represent the company as a manager or director. This person doesn’t have to be a Swiss citizen, but they must reside in the country with a valid work permit.
Once you have all the required documents, the process typically takes around two weeks. However, if you’re in a hurry, Switzerland’s Commercial Registry offers an express service that can complete the process in just five days. The most time-consuming part is often gathering the documents, so it’s worth preparing everything in advance to speed up the process.
Conclusion
Let’s quickly recap the key points we’ve covered today. The LLC is an excellent legal structure for entrepreneurs in Switzerland, offering limited liability, flexibility in management, and attractive tax advantages. However, challenges like higher setup costs and potential double taxation should also be considered. To ensure that your LLC is set up correctly and to navigate Swiss tax and accounting complexities, seeking professional advice is crucial. At ALPINEGATE Business Advisors, we specialise in helping entrepreneurs establish their companies smoothly and successfully. With the right guidance, your LLC can thrive in Switzerland’s stable, business-friendly environment. Thank you for joining us today, and we look forward to helping you take the next step in your business journey.
